Gold and silver prices remained nearly unchanged as gold rose while the price of silver edged down. U.S jobless claims tumbled down by 30k to 339k this positive news may have contributed to the modest rally in the commodities and stock markets. The modest rally of the Euro may have helped pull up the price of gold. Currently, the prices of gold and silver are declining. On today’s agenda: U.S. Producer Price Index, UoM Consumer Sentiment, Euro Area Industrial Production, and FOMC member Lacker’s Speech.
Here is a short outlook for precious metals for Friday, October 12th:
Precious Metals –October Update
On Thursday, Gold rose by 0.31% to $1,770.6; Silver on the other hand decreased by 0.08% to $34.08. During October, gold fell by 0.19%; silver, by 1.43%.
As seen below, the chart shows the developments of normalized prices of precious metals during September-October (normalized to 100 as of September 13th). During the week, gold and silver modestly declined.
The ratio between the two precious metals rose on Thursday to 51.95. During October, the ratio increased by 1.26% as silver slightly under-performed gold.
Europe Still Isn’t Looking Good
Besides the ongoing weakness of the Euro due to the debt crisis in Spain and the recent grim outlook of the IMF regarding the future economic progress of the Eurozone, the core Euro-zone countries including Germany and France aren’t doing well. There are reports that the recent weak economic reports regarding the progress of these countries suggest they aren’t doing too well. This means the Euro could remain weak against the USD in the near future, which could also curb the rally of gold and silver prices.
On Today’s Agenda
U.S. Producer Price Index:. In the recent report regarding August this index for finished goods hiked by 1.7% compared with July’s rate and rose by 0.5% in the last 12 months; this news might affect commodities;
Euro Area Industrial Production: This report will present the changes in the industrial production of the EU for August; in the recent report the EU industrial production rose by 0.6% (M-O-M) during July;
UoM Consumer Sentiment: University of Michigan will issue its preliminary consumer sentiment report; this survey could offer another insight to recent developments in U.S consumers sentiment about the economy; last time the sentiment index increased again to 79.2;
FOMC member Lacker’s Speech: The title of the speech is “Challenges to Economic Growth“;
Currencies / Bullion Market – October Update
The Euro/ USD changed direction and rose on Thursday by 0.42% to 1.2928. During the month, the Euro/USD rose by 0.54%. Further, several currencies including Aussie dollar also appreciated yesterday against the USD by 0.28%. The correlation between gold and Euro remains mid-strong and positive: during September-October, the linear correlation between the gold and EURO/USD reached 0.65 (daily percent changes); the linear correlation between the gold and Aussie dollar/USD was 0.69 (daily percent changes). The chart below shows the strong correlation between EURO/USD and gold. If the Euro and other risk currencies will resume their downward trend, they are likely to also drag down gold and silver. Currently, the Euro/USD is declining.
Current Gold and Silver Rates as of October 12th
Gold (November 2012 delivery) is traded at $1,769.0 per t oz. a $1.6 or 0.09% decrease as of 23:44*.
Silver (November 2012 delivery) is at $34.045 per t oz – a $0.037 or 0.11% decrease as of 23:44*.
Daily Outlook for October 12th
The prices of precious metals remained nearly unchanged yesterday and the anticlimax in the bullion market following the decision of the FOMC to launch QE3 continues. The modest rally of the Euro and Aussie dollar may have contributed to the little rise in the price of gold. On the other hand, until Spain will make a move regarding making a request for ECB to start its bond purchase program, or Europe will show some signs of recovery the Euro is likely to remain low and thus could further drag along with it precious metals prices. Today’s Euro Area industrial production might further affect the forex and commodities markets: if the report won’t be positive it could further pull down the Euro. Finally, the U.S PPI could affect the price of gold and silver via the reports effect on the USD.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
10:00– Euro Area Industrial Production
13:30 –U.S.Producer Price Index
14:55 – UoM Consumer Sentiment (preliminary)
17:35 – FOMC member Lacker’s Speech
For further reading: